POLITICS

Former Ornge lawyer denies involvement in controversial marketing agreement

06/06/2012 11:15 EDT | Updated 08/06/2012 05:12 EDT
TORONTO - Ornge's in-house lawyer denied Wednesday that she was involved in coming up with a controversial marketing services agreement that is alleged to have been part of a kickback scheme.

Cynthia Heinz, who left Ornge in February, said she wasn't responsible for the $4.7-million deal Ornge inked with AgustaWestland after the publicly funded air ambulance service bought 12 of its helicopters for $144 million.

But that contradicts the testimony of two other witnesses, who say Heinz was one of the people responsible for coming up with the marketing agreement.

Heinz, who was seconded to Ornge from her law firm Faskens Martineau, acknowledged that she provided legal advice on the deal and approved all the drafts of the agreement.

But she denied that she had any inkling that there was anything wrong with the agreement, which she thought was a "separate, arm's-length transaction" between Ornge and Agusta.

"I had no indication that anything was amiss," she told a legislative committee, her voice breaking.

"I can assure you that there was no way I would put my reputation, my family, at risk for this."

The committee has heard that Agusta paid an Ornge spinoff company $6.7 million, which included the marketing services agreement.

Both the auditor general and Ornge's new CEO Ron McKerlie have said they found no evidence that the work performed under the agreement reflected the amount of money paid.

Agusta has vehemently denied any wrongdoing in its dealings with Ornge, which have come under scrutiny in the wake of a criminal investigation of "financial irregularities" at the air ambulance service.

But the testimony of former Ornge executives has only raised more questions about the controversial agreement.

A former Ornge executive, Rick Potter, testified that he convinced Agusta to waive about $10 million in extra fees, but then-CEO Chris Mazza insisted that they be paid. Ornge ended up paying Agusta $7.2 million in additional charges. Potter said he told Heinz that "this was nuts."

Maria Renzella, former chief operating officer at Ornge Global, testified that Mazza struck a deal to pay Agusta for weight upgrades. In return, he wanted a $4.8-million donation from Agusta to be used to help with Ornge's "revenue-generating opportunities."

She said she was advised by Ornge's lawyers that it couldn't use the money in the way Mazza wanted unless Ornge could demonstrate that there was a value for the service being given.

Renzella said she suggested to Mazza that Ornge could provide marketing services and Mazza talked to Agusta about it.

Another former Ornge executive, Tom Rothfels, said it was his understanding that both Heinz and Renzella were primarily responsible for carrying out Mazza's orders to come up with the marketing agreement.

Heinz confirmed that Ornge asked if it could have Agusta pay the penalties and various credits to one of its spinoff companies "so that they could use that for their other ventures."

But she and the rest of the Faskens legal team made it clear to Ornge that they couldn't divert the money to another corporation, because it belonged to Ornge Investment Trust, an entity created to raise the cash to finance the purchase.

"We made it very clear to them that if they didn't want the cash, they would have to use that money," Heinz said.

"And the penalties and the credits could be used as a set-off then for any upgrades that they were going to receive."

Heinz said she was repeatedly reassured by Renzella and other Ornge executives that the deal was above board and that they were paying fair market value for the weight upgrades.

But some of the committee members weren't convinced.

"Sitting here, it looks like you drank the Kool-Aid," said NDP critic France Gelinas.

"They are telling you that this is what they want to do with this money, you tell them you're not allowed to do this, it is illegal, they come back with this marketing agreement which Ornge has never been into, has never provided," she said.

"(Mazza) hired his girlfriend to do the work and the daughter of another executive of Ornge to do the work, and you think that everything is just fine, that they are following the letter of the law?"

But Heinz insisted that both Potter and Rothfels are mistaken about her involvement in the marketing agreement.

She said she only talked to Mazza once about it in August 2010 — long after Ornge agreed to buy the helicopters in 2008 — when he asked her why the agreement hadn't been signed yet, she said.

"I never received any instructions," Heinz said. "I've never had any conversations with Dr. Mazza about this agreement."

Rothfels showed up in her office one day and talked about the agreement, she said.

"He said, 'You and Maria are being set up to take the fall,'" Heinz said. "And I said, 'What in the world are you talking about?'"

She said Renzella reassured her that there was nothing wrong with the agreement. Rothfels left Ornge shortly after and she didn't speak to him again.

Potter did tell her about the discount he'd negotiated, but couldn't produce any paperwork to prove it, Heinz said.

Then in January — after the government installed new leadership at Ornge — she was given a letter that Agusta wrote to Potter in December 2009 that corroborated Potter's deal with the company. She said she took it to Ornge's board.

Asked what went wrong at Ornge, Heinz — like many other witnesses — pointed the finger at Mazza, the mercurial mastermind behind Ornge.

"He wanted too much, too fast," she said, crying.

Mazza was "bright" and a "visionary" who wanted to create a world-class air ambulance service and expand it globally. But he got ahead of himself and "made a lot of enemies," Heinz said.

"Within that corporate office, there was a lot of fear," she added. "So it was a combination of things. And there are a lot of people who are suffering as a result."

But Heinz "should have known better," said Progressive Conservative Frank Klees.

With so many conflicting accounts of what happened at Ornge, it's hard to know who's lying and who's telling the truth, he said.

"At the end of the day, what we really need is a full-fledged public inquiry," Klees said.

Mazza has yet to testify before the committee and a second Speaker's warrant has been sent to compel him to appear July 18.

According to his lawyer, Mazza was declared unfit to testify by two psychiatrists. He took medical leave from Ornge last December amid allegations about questionable business deals and his $1.4-million pay.

Auditor general Jim McCarter has criticized the government for failing to oversee Ornge, despite giving it $730 million over five years and allowing it to borrow another $300 million.